22 November 2012

Namibia: Industry Not Happy With Environmental Tax

THE Ohlthaver & List Group is opposed to the environmental tax the Ministry of Finance wants to impose on the beverage industry.

The group voiced its concerns at a meeting held in Windhoek last week.

The taxes are aimed at protecting the environment and for industries to introduce environmentally friendly production processes.

The taxes include a one-off carbon emission levy and taxes on beverage cans, non-returnable plastic and glass bottles, new and second-hand cars, car tyres and non-energy-saving light bulbs.

"We are against that and the levy is also high," said Erwin Stegmann, the safety, health, environmental and quality manager at Ohlthaver & List Group.

He said the levies would not be good for the industry and the economy as a whole.

The Environmental Investment Fund (EIF), in partnership with the GIZ and the Ministry of Finance, has undertaken a study on environmental fiscal reform in Namibia.

The study is aimed at providing impetus to the ongoing process of introducing environmental levies in Namibia. The meeting was told that the taxes are strictly aimed at protecting the environment.

"We do not want to pay and the money will be used to increase the budget of the Ministry of Defence," said Gideon Shilongo, also of the Ohlthaver & List Group.

In a speech read on her behalf, the Permanent Secretary in the Ministry of Finance, Ericah Shafudah, said the taxes are aimed at encouraging industries to change their behaviour to use environmentally friendly alternatives.

Environmental taxation expert Jurge Klarer, the managing director of the Swiss-based Equilibrium Consulting who is contracted to lead the study, said environmental tax is defined as a reform of national tax system where there is a shift of the burden of transition from conventional taxes, for example on labour to environmentally damaging activities such as resource use and pollution.

"Environmental fiscal reform is a broader approach which focuses not just on shifting taxes and tax burden, but also on introducing green subsidies or reforming economically motivated subsidies," he said.

Namibia's Environmental Commissioner, Teofilus Nghitila, said there are three reasons why Namibia wants to introduce environmental taxes.

One is that the Namibian economy is natural resource based and the environment as the country's backbone of the economy is very fragile.

"Secondly, Namibia is the driest country in Sub-Saharan Africa and thus our resources should be managed sustainably to support lives and sustain our economic growth aspiration as embedded in our Vision 2030. Thirdly and most importantly, the effects of climate change in Namibia are understood to have the greatest impact as compared to other countries in Sub-Saharan Africa," said Nghitila.

He said Namibia, therefore, can no longer wait for the international community or those who are responsible for aggravating these impacts to provide resources. Nghitila said environmental fiscal reforms can raise revenues for poverty alleviation and pro-poor investment, contribute to deficit reduction, shift the tax burden away from labour and income tax, create jobs, stimulate innovation, incentivise change to renewable energy and enhance energy efficiency.

The tax rates on the identified products will be set out in the Government Gazette and will take into consideration the ability to pay to avoid placing undue burden on consumers as well as to incentivise recycling, utilisation of better alternatives and adoption of better environmental management methods.

"For the rest of other items under consideration, we have allowed for the undertaking of a study to assess the impacts of the proposed taxes. The results of this study are expected in February 2013," said Shafudah.

The Ministry of Finance, through its Customs and Excise Directorate, will be responsible for the collection of the taxes in line with the centralisation of the revenue approach and duty as source regime. Shafudah said the collection will help strengthen the government's capacity to fund environmental programmes and other national development programmes.

Absalom Shigwedha is a freelance environmental journalist.

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